What Trump, China and cheap crowns mean for U.S. dental laboratories

Proposed higher tariffs on imported medical devices may have a significant impact on the dental industry.

In April, Bloomberg Businessweek published an article about President Donald Trump’s plan to impose higher tariffs on imported medical devices (something he plans to accomplish by renegotiating the terms of NAFTA). Those devices, of course, include imported dental restorations and materials, which account for 40 percent of dental restorations in the U.S. Because of the nature of the subject, the article also focused on the state of the dental laboratory industry in the U.S.

The author’s findings were rather bleak: Imported devices are a fraction of the cost of domestic devices, so a tariff would not even the playing field; domestic labs are closing as a result of overseas competition and industry consolidation; and machines may soon be taking over for dental technicians.

What it didn’t mention was that overseas competition and the U.S. response is a lose-lose situation for American dental labs, according to Elizabeth Curran, CDT, associate professor and director of dental laboratory technology at Arizona School of Dentistry and Oral Health. Because materials used by laboratories are considered medical devices, the materials imported to make domestic restorations would be subject to the same tariff as imported restorations, offsetting any competitive edge the president would hope to gain.

“From a laboratory industry standpoint, none of this is new,” says Bennett Napier, executive director of the National Association of Dental Laboratories. “We expect offshore will continue to grow because of the pricing formulas that DSOs tend to look for in a laboratory.”

While the discounted prices of imported restorations boost profits for practices, it’s not good for the rest of the industry, particularly labs and especially dental technicians. But Napier posits that competition, whether foreign or domestic, has always been and will always remain present. The key for labs is to focus on the “differentiators” that make them stand out.

For foreign competition, Napier’s differentiating questions are, “What are their value-added services?” and “What are the other elements of the relationship that they can provide that can’t be served from a laboratory that’s 5,000 miles away?”

“With digital technology, communication can happen from anywhere, but there are always going to be certain things that a U.S. lab can provide that a foreign lab can’t,” Napier says. “A U.S. lab is going to have to focus on and be very good at those differentiators so that the product is not looked at as a commodity.”

Calling dental restorations commodities “takes away from what we feel in our hearts is a service to people,” Curran says. “We don’t do widgets. We do patient-specific restorations.”

“I think that lab [owners and technicians] should separate themselves by educating and training themselves in fundamentals, learning more about clinical dentistry and being an asset to the dental practice — not by having lower prices,” says Steve McGowan of Arcus Laboratory, a two-person lab outside of Seattle. “I think lab techs need to be educated more in all aspects of dentistry, including material science and clinical dentistry. If labs turn into widget factories and have what I call ‘step workers,’ the lab owners will make good money, but the lab technicians and our profession will go down the tubes.”

Step workers, says McGowan, do not know how to make a tooth from start to finish. “I think what we have now is training instead of education,” he says. “Most of the training in this field is provided by manufacturers who train you to use a certain product, but don’t educate you on why you need to use it. I think that’s been going on for a long time, and I think it’s a huge mistake.”

To stay competitive in the U.S. market, lab owners should make sure their current and prospective clients know about all of the lab’s services.

“A lot of labs undersell all of what they offer,” Napier says. “They’re known for X, but they may provide X, Y and Z, and because of that a dentist may say, ‘Well, this lab can only do these types of restorations or these types of services, so I have to go to another lab for this product.’ They need to do a good job of communicating what they can provide, so at least they’re in the mix of conversation.”

According to the NADL 2017 Business Survey, 63 percent of labs provide multiple services (typically a combination of crown and bridge, ceramics and implants). The 37 percent that offer one service are more likely to be small labs, which tend to provide only dentures and removables or crowns and bridges.

For labs to stand out, they should emphasize their customer service elements and complex treatment planning or consulting services, “especially with large implant cases or areas related to surgical guides,” Napier says.

“There are all kinds of things that are growing as emerging areas of need from a dental client perspective, so they need to communicate that they can provide those kinds of services.”

He goes on to explain that full-mouth reconstruction and complex implant cases are a significant growth area for dentists and labs—that those cases truly require a partnership, in which the dentist and lab tech can work together on a treatment plan that may take up to six months. The final stages might see the dentist and technician working together on site, something that would be hard to replicate with a foreign lab, he says.